Thu, Feb 20, 2003 page12

• US trade official sees WTO seeping into China

  MARKET OPENING A tour of Chongqing shows city authorities are counting on the requirements of WTO accession to help them catch up to eastern seaboard rivals

  • REUTERS
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  The average tourist walking through back alleys of Chongqing in western China might stumble across an open market and find piles of fat oranges among the rows of fruit.

  Crossing the street, he barely notices a new car moving along with the rumbling traffic.

  US Trade Representative Robert Zoellick sees the oranges too.

  But they're American oranges from Sunkist, and that car is a spanking new Ford, fresh off the assembly line from a fledgling joint venture in this sprawling city of more than 30 million.

  Zoellick, after all, is the top trade official from the world's largest economy, on a visit to find out how well US goods and investment were faring in these once sheltered markets after China joined the WTO.

  Many analysts expected the market opening pledges China made tied to its WTO entry in December 2001 would face resistance in far-flung provinces as entrenched local officials ignored central government diktat from 1,200km away in Beijing.

  But after haggling for fruit at the market, test driving a freshly minted Ford and chatting with Chinese students about trade, Zoellick says he found more evidence that Chong-qing was using WTO as a means of catching up to its rich eastern cousins.

  And Chongqing's Communist Party chief Huang Zhendong (黃鎮東) told Zoellick to come back, and bring his friends -- US investors.

  "What's intriguing is that the local government is focused on the WTO and China's accession to the WTO. I think there's a reason to that," he said.

  "If you take a city like Chongqing they know they're competing with the coastal provinces," he said.

  Since China opened its economy in the late 1970s, the uneven development has become stark. Eastern provinces and cities like glittering Shanghai have attracted ever-growing levels of investment as standards of living spiral upward.

  Inland provinces have been left in the dust. Inefficient industries languished as foreign direct investment concentrated along the coast in search of better infrastructure and services.

  As China encourages state enterprise reforms, companies go bust and put millions out of work, producing social pressures that sometimes explode in protests by angry workers.

  But Zoellick said WTO accession and its new rules and regulations helped draw some investment to the West that once would have gone straight to the eastern seaboard.

  In Chongqing, "they don't just see the rules as new requirements, they see it as an opportunity to show they can do what other people in the rest of China have done," he said.

  But the WTO also has brought real fears to China. As Zoellick bargained at the market, a nervous lychee peddler nearby reflected the worries of many Chinese about the pressures ahead.

  "The competition will be immense," he said.

  As trade barriers fall, cheap imports from abroad will squeeze a range of Chinese agricultural products, further pressuring a vast farm population that also has seen its income clipped by often crippling taxes and fees from above.

  Indeed, Zoellick raised concerns about China's implementation of its WTO commitments and US market access in talks with Vice Premier Wen Jiabao (溫家寶), expected to take over from Premier Zhu Rongji (朱鎔基) in March, and Trade Minister Shi Guangsheng (石廣生).

  He said the implementation process would take time.

  "I think this is going to be an evolutionary and extensive process," he said.

  "I've never seen economic growth follow only a straight line. There are going to be bumps in the road. But I certainly wouldn't underestimate their capability of being able to do those things," Zoellick said.

  And in a positive sign for US and other foreign investors, Chongqing itself has become a showcase for globalization.

  After driving a Ford Fiesta around a track with fake dips and bumps, Zoellick noted the plant was part of a Sino-US joint ven-ture. Chinese workers built cars based on a European model. And production is run by Australian and British managers.

  "That's the nature of the global economy and what it emphasizes most of all is the win-win potential," he said.

  Across town at Southwest University of Political Science and Law, Zoellick heard a uniform view from students -- some with hopes of studying abroad: The benefits of China's WTO entry outweighed the daunting challenges.

  "What you see is a society that certainly has many hills to climb but is embracing the possibility of markets and, frankly, capitalism," he said.

  And at the close of his meeting with Chongqing party boss Huang, Zoellick asked his Chinese host what message he should take back to Washington, where he is due to testify soon before the US Congress on China and other trade issues.

  The reply, said Zoellick: "Tell American businesses to bypass the east of China and come invest in Chongqing."

  Zoellick said later: "These people have it figured out."

  "They still have to overcome some of the old ways and take care of state-owned enterprise problems," he said.

  "But they know you can't chase away the golden goose of business and investment if a country wants to grow," he said.
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